Safe Harbor Match and 401(a)4 testing

[Guest hog4you2]

Can anyone tell me why (if ever) you would test a safe harbor match using the 401(a) test when there is no profit sharing contribution? Would there be any purpose? Supposedly the IRS mentioned that "if the match allocation passes under 401(a), no true-up is necessary."

Thank you

[jquazza]

If your document specifies that the match will made on a periodic basis, say by payroll, you don't have to true it up.

[Guest hog4you2]

This is true. The plan I am talking about is an annual match, but they make periodic deposits, so I need a true up.

But more importantly, do you ever have to test a safe harbor match under 401(a)4?

thanks,

dana

[jquazza]

401(a)(4) governs the nondiscrimination of plans. For 401(k) & (m), nondiscrimination is demonstrated by the ADP & ACP tests, which you avoid when you're safe harbor.

[Archimage]

I think what the IRS may be referring to is the testing of the benefits, rights, and features under 401(a)(4). However, you are not going to need to test for this unless you really had a funky match formula such as <5 yrs of service gets a 50% match and >5 yrs of service gets a 100% match. For your basic safe harbor match there is no need to test this.